Businesses always find countless ways to automate processes using data. If we didn't, we would still be in the 1950s. Without data, the business itself cannot grow or even function. But, what's even worse than no data is inaccurate data. In the commercial real estate market, floor plan measurement inaccuracies can wreck a company's portfolio.
It appears simple to use software like leasing analytics to review the value of an entire property. But does that matter if the building record's existing conditions are not up-to-date with the current standards or contain errors in the square footage calculations?
Suppose you are a landlord planning on renting an office, retail or industrial space to tenants. In all cases, your measurements must be correct and verifiable to prevent any expensive errors that could occur. If your end goal is to increase leasing revenues and occupancy levels to refinance or sell, then maintaining this information is essential. It's a basic concept, but it can either multiply your revenue or expose you to liability risks, security breaches, and inefficient building operations
Why Maintaining Accurate Floor Plans and Square Footage Calculations Matter
Do you take the actual measurement of the space within your buildings as the square footage you can lease? Are you applying a rentable factor? What about tracking and maintaining floor plan records and square footage measurements?
If the answer is no to the first two questions or “I don’t know to the last” you have a huge problem. You're losing money that's yours and exposing your tenants to data security issues.
Luckily, there are ways to capture missing value. People created building standards as an objective method to prevent this issue. Landlords and Tenants can reference this when calculating square footage in building spaces. Spaces are more accurate because you can't make measurements out of thin air. Commercial landlords now increase their revenues because they earn money on once unmarked spaces. Sounds obvious.
As mentioned above, floor plan data can immediately impact leasing revenues. There are two revenue-creating components for rental properties: price per square foot and rentable square feet. Rentable square footage is the amount listed on a lease and accounts for usable square footage. This includes the building's common spaces like the lobby, halls, shared amenities parking garages, and stairwells. It allows us to account for the entire building space provided for tenants based on the actual square footage they are renting.
When you aren’t optimizing your floor plan data for rentable square footage, you can't maximize the potential revenue of your commercial properties. If you don't have reliable tracking procedures, you can't calculate these values because you can't track how standards and floor plans change over time. Without the ability to calculate the rent, you won’t be able to calculate your return.
You Can’t Maximize Your Leases Without Rentable Square Footage
Yet, the same must be considered with the system itself. If you use a standard that doesn't provide the most profitability, it’s counter-productive to continue it.
Rentable square footage drives lease values because they add up to income. If you don't receive the highest profitability with your measurements, it might be time to conduct an ROI analysis.
The Main Problem With Finding Square Footage Numbers
Unreliable software is one part of the problem. The inconsistent knowledge management also affects the process. The most common way to find the numbers are old-fashioned managed silos. This could be a building architect’s records, spreadsheets, or PDFs. Another could be a previous owner's records and general building knowledge of an individual about a building. This has passed as acceptable but is no longer viable. Tenants demand verifiable data that is accurate and are becoming savvier. Better yet, tenants are demanding technology-focused landlords which give them peace of mind. If you continue to spend time operating the old way, it’s time to self-reflect. There are better methods to impact your building budgets, decarbonization efforts, and headaches. There’s too much time and energy that is necessary to complete the process. Why not have your critical information safe, reliable, and maximized for profit in the background?
Fixing Both Issues:
To get the most value out of your floor plans, you must have two tools:
1. Centralized data management
Seeing all your CAD files and floor plan measurements in one organized system already solves half the battle. This tool alone can break down barriers that prevent seeing your square footage numbers. But, you need more than accessing the files.
2. Frequent analysis comparison between older and newer versions of rentable/usable square footage measurements
Having centralized data management only lets you see your current value. It is a good start, but you need reliable numbers. As mentioned above, revising rentable square footage over time increases leasing revenue. To optimize your value, implement a system that compares older standards to newer ones. Without that, you'd lose profits.
People must use software programs designed for commercial buildings to calculate accurate and consistent usable square footage and rentable square footage according to standards like BOMA. In doing so, you maximize revenue as the layouts of your building change over time. If you notice errors, it's better to correct them immediately rather than wait until coordinating the purchase price.